Investor Presentaiton

Note 14. FAIR VALUE MEASUREMENTS Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows: (In millions) December 31, 2022 Cash Short-term investments Net derivative contracts Contingent future payments from acquisition of Green Motion (Note 2) December 31, 2021 Cash Short-term investments Net derivative contracts Contingent future payments from acquisition of Green Motion (Note 2) Total Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Unobservable inputs (Level 3) 294 $ 294 $ 261 261 29 (44) $ 297 $ 297 $ 271 271 41 (57) 29 (44) 41 $ (57) Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities. Other Fair Value Measurements Long-term debt and the current portion of long-term debt had a carrying value of $8,331 million and fair value of $7,625 million at December 31, 2022 compared to $8,566 million and $9,232 million, respectively, at December 31, 2021. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement. Short-Term Investments Eaton invests excess cash generated from operations in short-term marketable investments. Investments in marketable equity securities are valued at the closing price of the shares. All other short-term investments are at carrying value, which approximates the fair value due to the short-term maturities of these investments. A summary of short-term investments is as follows: (In millions) Time deposits and certificates of deposit with banks Money market investments Investments in marketable equity securities Total short-term investments 66 66 December 31 2022 2021 $ 248 $ 221 13 43 7 $ 261 $ 271

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